Antitrust agencies worried about Nortel's patent auction
Google's stalking horse bid has been cleared, but other bidders, such as Apple, could use IPR to limit competition, say DoJ sources
Published: 7 June, 2011
READ MORE: Nortel Networks | Patents/IPR
With only two weeks to go until the deadline expires to bid for Nortel's huge patent portfolio, US competition authorities are keeping a keen eye on the auction. Google kicked off the process in April with a 'stalking horse' bid of $900m but Apple, Microsoft, Nokia, RIM and ZTE have all been reported to be interested in trying to better that. The Department of Justice, aware of how important essential patents are in the competitive balance of the mobile market, is now said to be concerned about the outcome.
The DoJ, sources indicate, fears that if such a huge store of IPR falls into the hands of an already strong mobile and web player, the patents could be used to restrict competition. Some believe the major focus of concern is Apple, since the agency has already examined Google's initial bid and approved it (as have courts in Canada, the homeland of bankrupt Nortel).
The Wall Street Journal reports that Apple's interest in Nortel's 6,000-strong portfolio - which includes many important patents related to LTE, MIMO and other key technologies - has set off alarm bells. Apple is already the subject of several antitrust probes and complaints, and it has a reputation for ringfencing its IPR holdings, as well as pursuing alleged infringers aggressively.
Apple has filed suit against several Android players, as well as Nokia, and Google has openly said that one of its main reasons to bid for Nortel's assets is to give it a stronger hand when it comes under fire from patent-loaded enemies. It is being sued by Oracle while Microsoft has also made patent claims on Android. Nortel IPR is used in Android, iPhone and BlackBerry devices, says the report, but existing licensing deals are not detailed - although Microsoft has stated that it has a broad licensing agreement with Nortel which will be unaffected by any purchase.
According to the WSJ, the DoJ has already engaged in talks with Apple about its issues, even before the iPhone maker has officially bid for the patents. Google's own opening offer comes with a $25m 'break-up fee' in the event that another bidder is successful - a rival must offer at least $29m more than Google in order to win, while subsequent bids must go up in increments of at least $5m.
Microsoft already has licensing agreements in place with Nortel; these agreements will remain in place regardless of who wins the bidding war.
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